October 12, 2011
A reader sent in a question about credit history, asking if a lack of credit was grounds for disqualifying an FHA home loan application. It would be easy to assume the answer to that questions is “Yes”, but a quick check of FHA loan requirements reveals an answer that may surprise you.
According to the FHA rules for lenders found in Handbook 4155.1, the lack of credit history cannot be used as the basis for rejecting an FHA loan application.
That answer leads many to wonder how the lender can tell whether a borrower is a good credit risk or not. How does the FHA approach situations where the borrower has no previous credit?
According to the official site, “FHA permits mortgage lenders to establish a borrower
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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